UK wins tariff cuts in US trade deal, steel industry left in limbo

The UK has secured significant tariff reductions under a new trade deal with the US, which was finalized on Tuesday at the G7 summit in Canada.

UK Prime Minister Keir Starmer and US President Donald Trump signed the agreement, marking one of the most significant economic accords between the two countries in years.

The deal, which follows preliminary talks in May, brings immediate benefits to key UK industries, including automotive and aerospace, but stops short of resolving long-standing steel tariff disputes.

Before making an early departure from the G7 summit, Trump signed an executive order giving legal effect to key provisions of the trade pact.

“Britain would have protection against future tariffs because I like them,” the US president said.

Under the new terms, UK car exports to the US will face a reduced tariff of 10%, down sharply from the previous rate of 27.5%.

The aerospace sector will enjoy even greater relief, with tariffs on British exports such as aircraft engines and parts eliminated entirely.

“For the first time, the US has committed to reducing tariffs on UK aerospace goods such as engines and similar aircraft parts from the general 10% tariff being applied to all other countries, which is expected to come into force by the end of the month,” the UK government said in a statement.

“This deal is a huge win for the UK's world-class aerospace sector, currently facing additional 10% tariffs, helping make companies such as Rolls-Royce more competitive and allowing them to continue to be at the cutting edge of innovation,” the statement added.

British automotive firms can also “breathe a sigh of relief,” the UK government said, as the 10% tariff rate for exports will be effective by the end of the month.

Business and Trade Secretary Jonathan Reynolds said the agreement was the result of focused negotiation.

“Bringing trade deals into force can take several months, yet we are delivering on the first set of agreements in a matter of weeks… This government is doing all it can to reduce the pressures on businesses by lowering costs, speeding up delivery times, and helping them to navigate in a time of global uncertainty,” he said.

The new trade agreement will take effect seven days after official publication.

- Steel sector left behind

However, the agreement has faced criticism for failing to lift tariffs on UK steel and aluminum exports.

UK steel exports to the US will continue to face a 25% levy, down from a global 50% rate imposed by the Trump administration, but still putting British producers at a disadvantage.

The UK business department said both governments had pledged to “make progress towards 0% tariffs on core steel products as agreed.”

Earlier this month, the UK narrowly avoided being hit by Trump's plan to double steel tariffs to 50% for most countries. Britain received a temporary reprieve but risks higher duties if a deal is not reached by July 9.

The urgency is compounded by existing rules that require steel to be “melted and poured” in the exporting country to qualify for exemption—an issue complicated by the UK's shifting production landscape.

Tata Steel recently shut down its blast furnaces in Port Talbot as it transitions to electric arc furnaces, leaving the company temporarily reliant on imported steel.